Insider Buying

2iQ Insider Brief: Greif Inc (GEF: US) Infineon Technologies AG (IFX: GR) Abbvie Inc (ABBV: US)

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Greif Inc (GEF: US) 

12-month performance: -39%
Insider activity: Bullish
Buying pattern: Purchases from multiple directors including CEO and CFO
Recent news: Solid Q2 results

 

Greif is a leading provider of industrial packaging products and services. The group produces steel, plastic, fibre, flexible, corrugated, and reconditioned containers, intermediate bulk containers, and containerboard and packaging accessories. Operating in more than 40 countries across the world, Greif’s vision is to become the world’s best performing customer service company in industrial packaging. The stock is listed on the New York Stock Exchange and currently has a market capitalisation of $1.8 billion.

 

We last covered Greif on 9 January. At the time, the stock had just experienced a sharp sell-off on the back of trade war tension and global growth concerns, however, we noticed that insiders were buying shares and said that the stock looked interesting in our view. Immediately after our January report, Greif shares outperformed for a short period, climbing 9% in the next six weeks to reach a share price of $43 by late February. Yet since March, the shares have been dragged down again by further trade tensions and they are now back to the level they were trading at late in 2018.

GEF_US

Source: 2iQ Research

What’s interesting about Greif is that now that the shares have fallen back to the $33-$34 level again, insiders are buying once more. In the last week, we have observed large purchases from CEO Peter Watson, CFO Lawrence Hilsheimer, and independent director Mark Emkes, who together, have spent over $650,000 on stock. That’s a bullish sign, in our view. With Wall Street analysts expecting Greif’s earnings to rise at an annualised rate of 7% over the next three years, and multiple insiders buying shares, we continue to believe that the shares have upside potential. 

 

Infineon Technologies AG (IFX: GR) 

12-month performance: -27%
Insider activity: Bullish
Buying pattern: Purchases from multiple directors including Chairman and CFO
Recent news: Announced acquisition and capital raising

 

Infineon Technologies is a German semiconductor company. The company operates through four segments: Automotive, Industrial Power Control, Power Management & Multimarket, and Chip Card & Security. The stock is listed on the XETRA and currently has a market capitalisation of €19.9 billion.

 

Infineon Technologies shares have fallen substantially since early May for a number of reasons. The US’s crackdown on Huawei has hit semiconductor stocks across the board, while investors have also had concerns that Infineon is paying too much ($10.1 billion) to acquire Cypress Semiconductor Corporation. Additionally, the company announced a private placement to raise €1.5 billion in order to pay for the Cypress acquisition. Since the beginning of May, the shares are down nearly 25%. 

IFX_GR

Source: 2iQ Research

Looking at insider transaction activity, we think Infineon shares have rebound potential. We say this because in late June four directors purchased shares in the company, which, in our view, is a bullish signal. Those buying included Chairman Eckart Suenner, new CFO Sven Schneider, COO Jochen Hanebeck, and CMO Gassel Helmut – insiders who are likely to have an excellent understanding of the company’s future prospects. Interestingly, analysts at Bernstein recently initiated coverage of the stock with an ‘outperform’ rating and a €20 price target. With that in mind, we think the outlook for the stock is favourable.  

 

Abbvie Inc (ABBV: US)

 12-month performance: -24%
Insider activity: Bullish
Buying pattern: Large purchases from multiple directors
Recent news: Announced acquisition of Allergan

 

AbbVie is a research-based biopharmaceutical company that develops and manufactures a range of pharmaceutical products. The company is focused on treating difficult-to-cure diseases and has proven expertise in oncology, immunology, virology, and neuroscience. The stock is listed on the New York Stock Exchange and currently has a market capitalisation of $106 billion.

 

AbbVie shares fell sharply on 25 June after the company announced the $63 billion acquisition of Botox maker Allergan. Investors were clearly unimpressed with the deal, as the $188.24 per share acquisition price was a 45% premium to the closing price of Allergan’s shares on June 24. Some analysts also believe that the deal offers limited commercial synergies for AbbVie.

ABBV_US

Source: 2iQ Research

What we think is interesting here is that the day after the Allergan acquisition was announced, three top-level directors purchased a significant quantity of AbbVie shares. On 26 June, we observed a $2.0 million purchase from William Chase, Executive Vice President, Finance and Administration, as well as purchases worth a total of $1.3 million from independent directors Edward Rapp and Roxanne Schuh. These are clearly large buys, which suggests that these insiders are confident about the future. Given the size of these insider purchases, we think AbbVie shares are worth keeping a close eye on.